As much as I regret the post I am about to write I feel that it is only fair and holding to the spirit of BitFloor that I disclose everything that is going on and make the information available. Please read the entirety of the post. As always, if you have any questions please post them here versus contacting support so that other users may benefit from the answer (unless it is private).

Last night, a few of our servers were compromised. As a result, the attacker gained accesses to an unencrypted backup of the wallet keys (the actual keys live in an encrypted area). Using these keys they were able to transfer the coins. This attack took the vast majority of the coins BitFloor was holding on hand. As a result, I have paused all exchange operations. Even tho only a small majority of the coins are ever in use at any time, I felt it inappropriate to continue operating not having the capability to cover all account balances for BTC at the time.

Due to the serious nature of what has happened I am currently evaluating options for BitFloor. One of the last things I want to happen is for BitFloor to shutdown and cause more panic in the bitcoin community. The platform itself is very valuable and provides an important and friendly service to many users.BitFloor is very much focused on the end user and creating a reliable and trusted platform for everyone. Through exchange user support, I can continue to operate BitFloor. I believe that posting the exchange source and being even more transparent about operations would be a step in this direction if we were to continue operating. BitFloor is currently the #4 USD exchange and #1 in the US.

As a last resort, I will be forced to fully shut BitFloor down and initiate account repayment using current available funds. I still have all of the logs for accounts, trades, transfers. I know exactly how much each user currently has in their account for both USD and BTC. No records were lost in this attack.

I realize that saying that I appreciate everyone's understanding is a moot point, however I do wish to re-iterate that my goal is to find the best and most reasonable way forward for BitFloor customers and the exchange and not create more panic that the community has already seen time and time again.

I would like to keep this thread focused on evaluating ideas of BitFloor operation and will create a separate thread for discussion (see below) about the actual transactions and tracing the coin theft. I will not speak at detail about the actual breach at this time as my current focus is on the future and not the past.

This is not some pseudoeconomic post-modern Libertarian cult, it's an un-led, crowd-sourced mega startup organized around mutual self-interest where problems, whether of the theoretical or purely practical variety, are treated as temporary and, ultimately, solvable.Censorship of e-gold was easy. Censorship of Bitcoin will be… entertaining.

Yes. It was made when I manually did an upgrade and was put in the unencrypted area on disk. I realize the details of the failure and attack are interesting but I am currently focused on user accounts and exchange status going forward.

How long, given average operation, would it take to regain the 25K in fees?

We have seen steady growth over the last few months but our 30 day volume is ~64K BTC (717K USD) and given that we get 0.3% from each trade this means we make roughly 2.1k per month in USD (210 BTC at current rate). So quite a long time if trading did not ramp up. Regardless of the recovery time I felt it important to make this announcement as it impacts many users and the community.

hey, I realize this is an interesting question, but we are focused on the future here

This is not some pseudoeconomic post-modern Libertarian cult, it's an un-led, crowd-sourced mega startup organized around mutual self-interest where problems, whether of the theoretical or purely practical variety, are treated as temporary and, ultimately, solvable.Censorship of e-gold was easy. Censorship of Bitcoin will be… entertaining.